Hear the word blockchain and your first thought is likely to be Bitcoin. If you don’t know about the technology, you can be forgiven for thinking that blockchain and cryptocurrencies are the same.
In reality, blockchain is the technology that supports the cryptocurrency industry, not the industry itself. And this industry has grown considerably since Bitcoin first appeared back in 2008. Many business owners may be put off from exploring the potential of blockchain technologies because of this link. The world of crypto trading is notoriously unpredictable.
However, blockchain technology has many use cases beyond finance and currency trading. It has the potential to transform many industries. These include the personal identification and security sector, entertainment (look no further than the NFT boom), healthcare, and more.
Furthermore, one area where the blockchain is already shaking up is the supply chain. Before we explain how and why, let’s cover—in brief—what blockchain tech is.
What is blockchain technology?
We could dedicate an entire book to explaining blockchain tech, but we’ll keep it brief. The blockchain is essentially a database or ledger. It’s a very cleverly built database, but a database all the same.
However, instead of collecting information and storing it in a single, centralized source, blockchain tech is decentralized. It works as a distributed ledger with the same information stored on the devices of everyone who can access it.
When a change occurs, anyone with access can see the change. And because of complex, irreversible cryptographic techniques, these changes are As well as immutability and transparency, there are other benefits of blockchain tech too.
Blockchain-based systems are incredibly scalable. In theory, scaling a blockchain simply means adding a node. Blockchain solutions also promise a high level of availability. Unlike a centralized system, there is no danger of a single error forcing a network offline.
Finally, blockchain tech is very secure. Traditional threats to centralized systems don’t have the same consequences for data stored on the blockchain.
Many people believe that all blockchains are public, but they don’t have to be. Private blockchains allow businesses, or networks of businesses, to share access with whoever needs it. This allows companies to keep a transparent, secure record that they can view when needed.
How does blockchain technology benefit the supply chain?
Beyond its use in the cryptocurrency industry, blockchain has huge potential for several other sectors. However, none have proven better suited than the supply chain sector. The decentralized nature of blockchain tech makes it a perfect fit for the next generation of supply chain management solutions.
Logistics
The supply chain involves many suppliers, vendors, consumers, and connections. At each stage, the movement of goods is tracked using different processes and systems. The trouble is, without a simple and cheap solution, getting everyone to use the same method is impossible.
Blockchain solves this by offering a way for everyone involved to work from the same, simple system. This strengthens supply chain networks. When connectivity increases, logistics become easier to manage. This simple onboarding process could also enable organizations to move from regional to global distribution far more quickly.
Provenance
Data quality can reduce quickly in a centralized system. Human error at any stage of distribution can lead to false information about the cargo. This can enable dishonest vendors to fake the quality of goods.
Because blockchain provides an airtight record that is open to anyone allowed to view it, data can’t be altered. This enables suppliers to ensure the background of their goods as they move along the supply chain.
This degree of traceability is equally relevant at the source too. For example, highly sought-after goods can be certified at the start of the distribution journey. Just as human identity can be confirmed using tamper-proof documentation, so too can materials on the supply chain.
Inspection and reporting
The inspection and auditing process is an important part of supply chain management. Without blockchain tech, these reporting processes can cause bottlenecks and slow down distribution.
With blockchain tech, the reporting process is simplified. Because changes made to the blockchain are permanent, it can be the single source of all distribution data. This reduces time, effort, and costs.
Blockchain tech also increases the speed of other reporting functions. It makes it easier to record the number of goods. Users can quickly track receipts and purchase orders. Searching for serial numbers and barcodes is simple. And documents are automatically verified.
What’s happening now?
Many blockchain-focused supply chain solutions are live. One of the key players is IBM. A pioneer of blockchain tech, IBM was one of the first companies to invest in decentralized databases beyond finance.
Today, IBM Blockchain provides supply chain solutions to some of the world’s largest companies. For example, it has worked with KPMG, Merck, and Walmart to root out counterfeit pharmaceutical supplies.
It helps Home Depot strengthen relationships with suppliers. And it recently signed up the shipping giants Hapag-Lloyd and Ocean Network Express (ONE) Pte. Ltd to the work with its TradeLens logistics platform.
However, IBM isn’t the only option for businesses. There are many other blockchain companies in operation. One of the most relevant is DORÆ, a commodities provenance tool. Sweetbridge helps facilitate unified documentation, cross-border trade, and accounting. And Provenance is a blockchain company that focuses on the sustainability of food products.
And the future of blockchain technology?
Blockchain for the supply chain is here to stay, and some of the largest companies in the world are already on board. However, it will require a major shift in the awareness of blockchain tech for it to become the norm. For the majority of supply chain operations to move to be decentralized, users need to be brave.
As with any new technology, general uptake can be slow. However, the benefits of blockchain to the supply chain are already clear to see. In the future, supply chain processes based on the blockchain could have massive consequences. They could also affect wider issues such as sustainability, fair trade, and climate-friendly shipping too.
